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Cryptocurrency has taken the world by storm. More millennials and Gen Z traders are invested in crypto than ever, forming approximately 94% of all crypto buyers. Unfortunately, most of these traders will fall prey to the most common crypto trading mistakes as a beginner. To help you avoid these mistakes, here are seven of the most common beginner crypto trading don’ts.
Not Choosing The Right Platform
Before you start trading in crypto, it’s important to find the right platform for you and your goals as a trader. There is an overwhelming number of platforms to choose from nowadays, and not all of them are created equal. To help you choose the right one, consider factors such as a user-friendly interface, selection of cryptocurrencies, educational resources available, and account fees and prices. Another thing to be mindful of when selecting a platform is their security features. Ideally, you want a platform with two-factor authentication and data encryption.
Failing To Diversify
How many times have you heard the saying “don’t put all your eggs in one basket”? It turns out there’s some truth to it. When it comes to crypto, like other securities, diversification is generally a good idea. A diversified crypto portfolio reduces your risk of losses and maximizes your chances for profit. Depending on your trading style, objectives, and budget, you can spread your investments out across multiple cryptos accordingly.
Believing Trading Is All About Luck
While it doesn’t hurt to have luck on your side as a crypto trader, making a profit is not completely dependent on chance. You simply cannot rely on luck alone if you want to seriously make a profit as a crypto trader. It’s important to do your own extensive research, stay up to date on crypto news, and understand the foundations of crypto trading as a trader.
Neglecting To Do Your Own Research
When it comes to crypto, like other forms of trading, information is key. To ensure you have the most accurate and recent information on crypto trading, it’s important to do your own research as a trader. Ensure your sources for your research are reliable and trustworthy. Similarly, only heed advice from investors you trus.
Making Trade Decisions Based On Herd Mentality
Far too many new traders base their decisions on what everyone else is doing. While this strategy may pay off a few times, it’s not sustainable in the long-term. It’s important to understand for yourself the logic behind these moves. Moreover, following the herd means you’ll always be behind. By creating your own strategy based on your research, you can stay ahead of these trends.
Panic Buying/Selling
As a beginner crypto trader, it can be terrifying to watch your investment drop in price. While it may be tempting to sell your assets as soon as its price drops, try to resist panic selling. Instead, do your research to determine if the price is likely to swing back up in the future. In addition to panic selling, you should also avoid panic buying. New crypto traders are quick to believe others when they claim to have found the next big crypto asset. Before impulsively purchasing the cryptocurrency, it’s best to perform your own research and analysis first.
Basing Your Decisions Solely On Price
It’s easy to focus on price as a fledgling crypto trader. However, there’s so many more factors to consider when making a trade decision. These factors include the project’s backing, its technology, and the chances of it succeeding in the long run. These factors are not always reflected in the price of the asset, but are equally as vital in the value of the asset.
Conclusion
Some mistakes are inevitable as a new trader. However, some are easily avoidable. As a new crypto trader, doing your own research and having a solid understanding of cryptocurrency is crucial to your success.
Author Bio
Christina Lee is a finance writer and editor at Paper Fellows. She is deeply fascinated by cryptocurrency and enjoys the challenge of finding new profitable trade opportunities.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.